NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 1 - DESCRIPTION OF PLAN
The following description of The Standard Register Employee Savings Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan established to provide participating employees of The Standard Register Company (the Company or employer) with the opportunity to plan a savings program for long-term financial security. All full-time employees are eligible to participate in the Plan.
Participant Contributions
Participants may elect to contribute between
1%
and
75%
of their eligible annual compensation, subject to limitations imposed by the Internal Revenue Code. The Plan allows automatic enrollment (with a
3%
salary deferral) for newly hired employees until they elect otherwise and automatic
1%
annual increases in the deferral percentages until the
10%
level is attained. If a participant does not wish to participate in this automatic incremental increase or wishes to change the amount of future annual increases in his or her contribution percentages, he or she can do so by contacting the Plan's trustee.
Employer Contributions
Effective January 23, 2012, the plan was amended and the Company's matching contributions were suspended; however, the Company may elect to make future matching contributions at its discretion.
Participant Accounts
Each participant's account is credited with the participant's contributions and Plan earnings or losses. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Employees participating in the Plan can make changes among investment funds in accordance with rules established by the Plan administrator.
Vesting
Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Vesting in the employer contribution portion of their accounts plus earnings thereon is based on years of continuous service. A participant has no vested interest for the first two years of vesting service (earn one year of service for each year worked at least 1,000 hours). After two years, a participant is 100 percent vested. If a participant terminates or retires, the participant's non-vested portion of the employer match is used to reduce future employer contributions.
Distributions
All distributions under the Plan are paid in lump sum or periodic installments. Installments (quarterly, semi-annually, or annually) may not exceed 15 years and are not allowed if the installment payment will be for an amount less than $100 per month.
Distributions are not permitted while participants are employed by the Company, except for “Hardship” as defined by the IRS, when employees reach age 59½ or become disabled, or distributions of after-tax contributions and rollovers. Participants who have terminated or retired may elect an immediate distribution or may defer this distribution up to age 70½ if the fund balance is at least $5,000.
Notes Receivable from Participants
An active participant may obtain a loan by direct application with the trustee. A loan may be up to $50,000 or 50% of the participant's nonforfeitable individual account balance, whichever is lower. A participant may only have two loans outstanding at a time. The minimum loan amount shall be $1,000. If the loan is to be used to acquire the participant's principal residence, then the minimum loan amount is $10,000. The maximum loan term is four years, nine months
for regular loans, and 15 years for principal residence loans. The minimum term for all loans is one year. Interest rates on participant loans ranged from 4.25% to 9.25% as of
December 31, 2013
and 2012. Principal and interest is paid ratably through monthly payroll deductions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are prepared on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP) as more explicitly described in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Plan's management to make estimates and assumptions that affect certain amounts and disclosures reported in the financial statements and accompanying notes. These estimates and assumptions are based on information presently available and actual results could differ from those estimates.
Forfeited Accounts
Forfeited, nonvested accounts totaled
$93,552
and
$26,213
at
December 31, 2013
and
2012
, respectively.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent loans are treated as distributions based upon the terms of the Plan document.
Investment Valuation and Income Recognition
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan's gains and losses on investments bought and sold as well as held during the year. Capital gain distributions are included in dividend and interest income.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
A portion of the Plan's administrative expenses are paid by the employer.
Subsequent Events
Subsequent events have been evaluated through the date the financial statements were issued and filed with the United States Securities and Exchange Commission.
NOTE 3 - INVESTMENTS
The following presents the fair value of investments that represent 5 percent or more of the Plan's net assets at
December 31
:
|
|
|
|
|
|
|
|
2013
|
|
2012
|
Aberdeen Emerging Markets Institutional Fund
|
|
$11,094,983
|
|
$12,065,791
|
Amana Growth Fund
|
|
*
|
|
13,320,479
|
Blackrock Equity Dividend Fund Class I
|
|
12,052,337
|
|
15,678,510
|
F-Squared Alpha Sector US Equity Class I
|
|
25,844,837
|
|
*
|
Franklin Templeton Emerging Market Debt Opportunities Fund
|
|
16,383,723
|
|
15,681,955
|
Oakmark Funds - The Oakmark International Fund
|
|
23,237,351
|
|
23,832,542
|
PIMCO Total Return Fund Institutional Shares
|
|
*
|
|
33,843,144
|
PIMCO Unconstrained Bond Class A
|
|
30,296,310
|
|
*
|
Prudential Jennison Natural Resources Inc Class A
|
|
16,375,295
|
|
*
|
Prudential Jennison Natural Resources Inc Class Z
|
|
*
|
|
14,288,343
|
Templeton Global Bond Fund - Advisor Class
|
|
17,397,637
|
|
16,634,323
|
T. Rowe Price Mid-Cap Growth Fund
|
|
11,298,111
|
|
9,609,591
|
|
|
|
|
|
*- Fund balance did not represent 5% or more of the Plan's net assets available for benefits
|
During
2013
, the Plan's investments (including investments bought, sold and held during the year) appreciated in fair value as follows:
|
|
|
|
|
|
Standard Register Company common stock
|
|
$
|
79,784
|
|
Mutual funds
|
|
14,313,358
|
|
Common trust fund
|
|
2,790,532
|
|
|
|
17,183,674
|
|
NOTE 4 - FAIR VALUE MEASUREMENTS
The Plan has determined the fair value of certain assets through application of an accounting standard which provides a framework for measuring fair value.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and require the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The fair value hierarchy is as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access as of the measurement date.
Level 2 - Significant other observable inputs other than the Level 1 prices, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.
Level 3 - Significant unobservable inputs that reflect an entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
A description of the valuation methodologies used for assets measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. There have been no changes in the methodologies used at
December 31, 2013
and
2012
.
Money market fund:
Valued at the net asset value (“NAV”) of shares held by the Plan at year end.
Common stock and mutual funds
: Valued at the closing price reported on the active market on which the individual securities are traded.
Common trust fund
: Valued at the net asset value (NAV) of shares held by the Plan at year end, as reported to the Plan by the trustee. A fund's NAV reflects an exit price, is the same for all holders of the fund, and provides the basis for current transactions.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the Plan's investments at fair value as of
December 31, 2013
and
2012
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013
|
|
Total
|
|
Level 1
|
|
Level 2
|
Money market fund
|
$
|
7,711,591
|
|
|
$
|
—
|
|
|
$
|
7,711,591
|
|
Company common stock
|
73,114
|
|
|
73,114
|
|
|
—
|
|
Common trust fund
|
25,844,837
|
|
|
—
|
|
|
25,844,837
|
|
Mutual funds:
|
|
|
|
|
|
Value funds
|
22,094,410
|
|
|
22,094,410
|
|
|
—
|
|
Growth funds
|
41,740,647
|
|
|
41,740,647
|
|
|
—
|
|
Blended funds
|
29,643,234
|
|
|
29,643,234
|
|
|
—
|
|
Fixed income funds
|
65,110,003
|
|
|
65,110,003
|
|
|
—
|
|
Total investments at fair value
|
$
|
192,217,836
|
|
|
$
|
158,661,408
|
|
|
$
|
33,556,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2012
|
|
Total
|
|
Level 1
|
|
Level 2
|
Money market fund
|
$
|
7,328,380
|
|
|
$
|
—
|
|
|
$
|
7,328,380
|
|
Company common stock
|
55,541
|
|
|
55,541
|
|
|
—
|
|
Common trust fund
|
7,435,571
|
|
|
—
|
|
|
7,435,571
|
|
Mutual funds:
|
|
|
|
|
|
Value funds
|
25,771,907
|
|
|
25,771,907
|
|
|
—
|
|
Growth funds
|
49,981,154
|
|
|
49,981,154
|
|
|
—
|
|
Blended funds
|
27,471,779
|
|
|
27,471,779
|
|
|
—
|
|
Fixed income funds
|
66,159,422
|
|
|
66,159,422
|
|
|
—
|
|
Total investments at fair value
|
$
|
184,203,754
|
|
|
$
|
169,439,803
|
|
|
$
|
14,763,951
|
|
NOTE 5 - PLAN TERMINATION
The Company expects to continue the Plan indefinitely, but continuance is not assumed as a contractual obligation and the Company reserves the right at any time by action of its Board of Directors to terminate the Plan. The allocation and distribution of contributions would be in accordance with the approved Plan agreement.
NOTE 6 - INCOME TAX STATUS
The Plan obtained a determination letter on May 5, 2012 in which the Internal Revenue Service (IRS) stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan Administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements.
The Plan administrator evaluated the Plan's tax positions and concluded that there are no uncertain tax positions that require recognition or disclosure in the financial statements. With few exceptions, the Plan is no longer subject to income tax examinations by tax authorities for years before 2010.
NOTE 7 - RELATED-PARTY TRANSACTIONS
Certain Plan investments are managed by Wells Fargo Bank N.A. and Reliance Trust Company. Wells Fargo Bank N.A. and Reliance Trust Company are the current trustees as defined by the Plan and, therefore, transactions during the period of January 1, 2012 -
December 31, 2013
qualify as party-in-interest transactions.
Certain Plan investment purchases and sales are shares of The Standard Register Company common stock (Standard Register Company stock). During the year ended
December 31, 2013
, purchases of Standard Register Company stock were
$6
and sales were
$62,217
. No dividend income was received from Standard Register Company stock during the year ended
December 31, 2013
. The ending balance in the Standard Register Company stock represents approximately
0.04%
and
0.03%
of the Plan's total investments as of
December 31, 2013
and
2012
, respectively.
Fees paid for trustee, third party administration, and investment advisory services rendered by parties-in-interest during the year totaled
$548,373
.
NOTE 8 - RISKS AND UNCERTAINTIES
The Plan provides for various investment options in several investment securities and instruments. Investment securities are exposed to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statement of Net Assets Available for Benefits.
NOTE 9 - SUBSEQUENT EVENTS
The Company acquired WorkflowOne, LLC (“WorkflowOne”) in August 2013. The employees of WorkflowOne are currently eligible to participate in the WorkflowOne 401(k) Retirement Plan. During 2014 the Company intends to merge the two plans so that all employees are part of a single plan.